BludgerTrack: 51.8-48.2 to Labor

The weekly poll aggregate has Newspoll eliminating Labor’s modest gains over the early new year period, when it had only Essential, Morgan and ReachTEL to go on.

The first Newspoll of the year has caused Labor to take a knock on the BludgerTrack poll aggregate, helped along a little by a softer result from Morgan. Newspoll has also driven up the Greens, whose breakthrough into double figures softens a shift from Labor to Coalition on the primary vote to a 0.8% movement on two-party preferred. That translates into a solid six-point change on the seat projection, which is now back to hung parliament territory. Taking into account Labor’s still solid lead on the two-party result, this demonstrates the height of the bar the BludgerTrack model sets for Labor in making it to an absolute majority, mostly on account of sophomore surge effects in the decisive marginal seats. On the state breakdowns, the Coalition recovers one seat each in Victoria and Tasmania and four in Queensland. The latter is down to the publication of a Galaxy poll of federal voting intention in Queensland from yesterday’s Courier-Mail, which I have thus far failed to comment on. The poll of 800 respondents showed the Coalition with a 52-48 lead – a swing of 5% to Labor from the election, and 4% on the previous such poll in November – from primary votes of 41% for the Coalition (down five on the November poll), 33% for Labor (up three), 7% for the Greens (steady), 4% for Katter’s Australian Party (up one) and 11% for the Palmer United Party (up three). It was evident that BludgerTrack had wandered off the reservation for a while there so far as its Queensland projection was concerned, and the addition of this substantial new data point from a high-quality pollster has returned it to where it probably should have been all along.

There are also two new results to feed into the leadership ratings, one being the regular findings from Newspoll and the other the monthly result from Essential Research. Both have landed in exactly the same place after bias adjustments were added, and the effect has been to maintain the downward momentum for Bill Shorten that emerged when the last numbers were added from Essential Research a month ago. Tony Abbott on the other hand has been in a gentler pattern of decline after the steep fall that followed the Coalition’s polling slip in November, and has a stable lead of slightly below double figures as preferred prime minister. Some good analysis of the leadership ratings is available at the bottom of this post by Kevin Bonham, who previously noted that Shorten’s early ratings were on the mediocre side for a leader new to the job, and now finds similarities with Brendan Nelson and Simon Crean at comparable stages of the game.

WWP – care to make a good argument – or any argument – against what I wrote?

I thought it was so stupid it didn’t need it but essentially lowering wages in any currency you wish to measure them in is facing international trade and competition and going all shy and saying ‘oh gosh we can’t compete with that let’s give in and screw people over’. Weak and ultimately ineffective unless you think the whole world should move to introduce slavery.

In relation to the AUD volatility is bad but a gently and steadily rising dollar is largely good for us and should be encouraged. Industries need to adjust and not whinge and moan about how hard it is because they run the business badly.

“He has done nothing of any lasting value. Howes’ speech can be dismissed in three words: wanker’s gonna wank. A really significant speech would have seen union, business and government leaders consulted beforehand and offer real support, evidence of real heft on Howes’ part that is clearly lacking. Plenty of big news (e.g. the Toyota shutdown, the failure of the dire budget predictions last year, this government’s palpable fear of regional electorates) went begging because journos got sucked into this bullshit by someone with a big mouth but little actual clout.”

is correct.
Well pretty well, as I pointed out, a lot of the costs of a low AUD are passed on to us and the benefits of a high AUD are not.
But later you said:

I was arguing for a lower AUD to prevent there being any need to reduce wages.

which directly contradicts the bit above.

AUD is a mixed blessing either way it goes, and we are only being told half the story from one mob of vested interests.

The other bit is that AUD is blamed for all our woes and ‘conditions’ and ‘high wages; and ‘perks a la Joe and Tony’s bullshit re SPC. High wages relative to the 3rd world is pushed as a major reason why our manufacturing exports can’t compete on the 3rd world global scale.
That’s largely irrelevant cos wages only constitute a small fraction of costs, I’ve seen 13% quoted by an industry figure recently.

You claimed our wages are high thanks to the AUD ‘automatically’. You brought the concept up.
I pointed out they are not high that 1 in 8 [its worse than 1 in 9] are in poverty in this country. The claim they are high is an attempt by rightists like Tony and his mates to blame people for the failure of manufacturing.

On the dear old SMH I wonder how much longer it can survive. The Guardian Australia is the first left-leaning newspaper in the history of this country. Why would people of that persuasion bother with the herald (other than to read Mike Carlton on Saturday). Why would they bother paying to read Peter Reith (what were they thinking?). Surely, the Guardian is going to peel off a lot of Herald readers.
Like I said, after 30 years I’m going to stop buying the herald in the morning. I’ll read a book on the bus.

but a gently and steadily rising dollar is largely good for us and should be encouraged.

Do you think that is what happened? That increasing from 70 US cents to $1.05, and then retreating back to 90c currently is “steadily rising dollar”, presumably steadily not being so fast as to cause painful disruptions?

I agree that a “steadily rising dollar” makes sense in terms of reflecting relative productivity. If, as a country, we are successfully increasing productivity faster than other countries, I fully agree that our currency should theoretically appreciate to reflect that.

But that’s not what happened post-GFC. The AUD levels were based around the fact that everyone else was madly devaluing their currencies, and the reef-fish forex traders started treating the AUD as a China proxy, and China was considered strong etc. ie the AUD high level had nothing to do with any broad fundamental changes in the Australian economy, and certainly wasn’t reflecting Australian productivity.

I agree that a “steadily rising dollar” makes sense in terms of reflecting relative productivity. If, as a country, we are successfully increasing productivity faster than other countries, I fully agree that our currency should theoretically appreciate to reflect that.

Jackol the Australian economy did change strongly and fundamentally relative [as you would say] to the rest of the world after the GFC hit.
We had the best managed economy in the developed world and the smallest negative impact of the GFC relative to our peers.
Relative to just about everybody else we were a shining beacon of high productivity.
Gor bless Kev and Wayne and Treasury and the stimulus. Seriously.

Its just that the business people and their mates in the media and COALition didn’t like the idea of a government saving an economy and a society so they rubbished the achievement.
Actually Dunlop’s article is relevant here, I suggest a read.

Yes, it is a mixed blessing. But to pretend that a substantial sustained shift in the level of the AUD is not directly the cause of a great deal of stress in our economy is foolish, and if we have the opportunity to mitigate that stress with a lower AUD (closer to the long term average) then I think it should be obvious that we would want to have that. Even if our PCs are a little bit more expensive.

The other bit is that AUD is blamed for all our woes and ‘conditions’ and ‘high wages; and ‘perks a la Joe and Tony’s bullshit re SPC.

You’re conflating separate things. The level of the AUD clearly has no bearing on ‘conditions’ and ‘perks’. I agree entirely that attacking conditions and so-called ‘perks’ is bogus.

However, the fundamental issue is that the high AUD – when the level of the AUD is not reflecting any economic fundamentals, and post-GFC I don’t believe it has been – causes distortions in the economy. Imports are artificially cheap, exports are artificially expensive. Yes, your PC becomes cheaper, but did you (or Australian workers in general) suddenly work harder or more effectively to give you the ability to buy more stuff? Nope. You don’t get something for nothing, and that high AUD necessarily caused (and is causing) stress on the Australian economy, and it has nothing to do with any local economic fundamentals. That’s my point.

You claimed our wages are high thanks to the AUD ‘automatically’. You brought the concept up.

If the long term average for the AUD is 70c US, and we’re now at 90c US, of course this has an impact on the relative competitiveness of Australian workers. We didn’t become 28% more productive relative to the rest of the world in 5 years.

And ‘high wages’, in the context of my comment, is relative to other countries and hence the exchange rate discussion. The AUD going up or down won’t make those living in poverty more or less poor in any significant way, so trying to link my desire for a lower AUD to Australian poverty levels is completely bogus.

The claim they are high is an attempt by rightists like Tony and his mates to blame people for the failure of manufacturing.

I am the one claiming that a lower AUD would be preferable to improve the competitiveness of Australian workers – without them suffering wage declines. I’m not doing so to support “rightists like Tony and his mates”.

Fundamentally, I’ve made this case before and it hasn’t seemed so controversial then. I was trying to point out that I think your statements about how PCs are cheaper because of the high AUD, and that therefore a high AUD was a good thing is glib nonsense, and that if it comes down to a choice of cheaper PCs or better employment conditions in Australia I will choose the latter (and a lower AUD) every day of the week.

Damn.
Just lost a post mainly addressed to Jackol.
Here’s the short version.

AUD high level had nothing to do with any broad fundamental changes in the Australian economy, and certainly wasn’t reflecting Australian productivity.

Jackol the Australia economy did change, dramatically so, and our productivity did improve, dramatically so, directly after the GFC hit thanks to Kev, Wayne and Treasury and the stimulus.
We were widely internationally acclaimed as having probably the most successful response to the GFC.

the Australian economy did change strongly and fundamentally relative [as you would say] to the rest of the world after the GFC hit.

No it didn’t. We didn’t suddenly become a lot more productive – productivity has been trundling along, and I don’t think there is a “productivity crisis” in labour – productivity growth in labour has been healthy in recent times – but the AUD didn’t appreciate to its stellar heights because we were so productive.

To the extent this is the case your solution is addressing the symptom and not the cause.

I’m sorry, but you’ve lost me here.

My argument is that the AUD appreciated substantially post-GFC on the back of forces that had nothing to do with Australian economic fundamentals, and that this has caused a lot of stress on our economy and continues to do so. My preferred remedy to this artificial appreciation is to try to restore the AUD to something closer to its long term average.

With the present attitude of the LNP been a laughing stock of any fair minded political observer, What additional options are there for the system to be changed to prevent parties lying there way into power and to bring in major changes that were never on their election platform and would be virtually impossible to change by an incoming government without major cost.
The system needs a major review if good government is more than a wish.
The way the minor parties are on the increase we will soon end up the way that Italy is. Do we just continue to talk about it and hope it goes away?

Say hello to your new wages – same nominal value, lower purchasing power for imports. When the AUD falls, the price of non-tradeables stay the same. This is largely services and locally grown produce. Tradeables, OTOH, become more expensive. This is basically everything manufactured.

The AUD mechanism and its effect on the price of tradeables has very little to do with the nominal value of wages.

Now, what SHOULD have happened as the dollar started moving up is that our non-existent soveriegn weath fund would buy up more overseas assets as they became realtively cheaper. Two benefits: (1) The SWF would help suppress the peak of the exchange rate appreciation, with all the benefits to manufacturing local export-oriented businesses that entails, and (2) when the dollar fell again, as it was always going to do, the newly purchased o/s assets act as a hedge, and helps the country to maintain its current account surplus (or reduce its CAD): that is its aggregate o/s income.

If you have some spare cash around , you can try it for yourself – purchase some USD/AUD and EUR/AUD ETFs or stocks local export companies (i.e. miners) that have contracts and recieve payments in USDs. When the dollar is high, these should be cheaper; vice versa when the dollar falls.

guytaur

Its become the currency of speculation.

It’s a carry trade. Risk free returns (i.e. bank deposit rates) here are higher than basically anywhere else that you might want to store some cash. It’s not a speculative move. A speculative move would be investing in Australian housing in order to make a capital gain. A speculative move would be throwing a heap of cheap loans towards Turkey, Hungary or Brazil. This is why we the AUS is not being sold as heavily as the EM currency as the US begins to taper its QE.

OK lets take this, from you, as a hypothetical given and ignore all the other factors that are involved including what I outlined above re the GFC:

If the long term average for the AUD is 70c US, and we’re now at 90c US, of course this has an impact on the relative competitiveness of Australian workers.

And I’ll call that 20% [I know its a tad more] so a product priced at $100 [how and by who?] goes up to $120 then the increased wage component is a couple of dollars out of $120. Sort of.
Bugger all.
Ignoring all other factors eg, corporate salaries, taxes, tariffs, profits, transport, raw materials whatever.

Nup our woes in the manufacturing field etc are related to other factors not AUD, wages relative or domestic only

Well apparently everything I write is “so stupid” that you don’t need to even have a reason to leap in and disagree.

Not everything you write you made a lot of sense defending the post I assumed was channelling Gina, but still devaluing the dollar is bad. However provided you address the real problems, rather than ignore them, then you might take deliberate pain in a very short term for long term gain. But still you are deliberately inflicting pain not doing a good thing.

Unemployment rate higher under LNP during a global recovery than it was under @AustralianLabor during a global crisis

There ain’t no global recovery in anything but asset prices. It’s just another bubble.

Capital has over-invested, returns on capital won’t cover debts, and the world’s central banks are attempting to stave off a period of deflation. They are doing this because when nominal wages are held constant, deflation reduces the value of capital and increases thereby increases profit share of labour, and we all know who the banks work for, central or otherwise, don’t we?

Would you guys [?] agree that Australia’s major economic problem is that we exhibit the standard characteristics of a 3rd world economy? Have for centuries.

Our exports are high bulk, low unit value, low value added mainly primary products, eg dirt and grain and animals, transported by other countries’ ships, financed by banks etc mainly owned and controlled in their own interests by other countries and employing low numbers of workers [eg only about 150,000 farmers]?

Our imports are secondary and tertiary, high value, low bulk, high value added, employment intensive, hi-tech manufactured items and invisibles such as money?

Domestic manufacturing is influenced [controlled?] by overseas owners and subject to their global wants and not our needs.

Comment?

Oh and Jackol. its not the cost of my computer that will add to consumer costs in this country with a lower AUD, but the costs of all the imported stuff that business use and which they will pass on to us without our wages increasing.
ANZ’s cost will increase so my banking charges will follow, farm machinery price increses [albeit a business cost] will be reflected on food etc cost …. and so it goes.

Environment minister Greg Hunt is set to grant himself retrospective legal immunity against potential claims that he failed to consider environmental advice before approving key mining projects.

A Senate inquiry has cleared the way for a bill to pass the upper house preventing legal challenges to environmental approvals issued by Hunt before 31 December last year, on the grounds the minister ignored expert advice on risks to threatened species.

Decisions granted immunity include controversial approvals in Queensland of dredging at Abbot Point, an LNG export facility at Curtis Island and a coalmine in the Galilee Basin.

Would you guys [?] agree that Australia’s major economic problem is that we exhibit the standard characteristics of a 3rd world economy? Have for centuries.

A key difference is that we have a mature and sophisticated domestic services market, for things like health, education, entertainment, legal services, and so on. These things keep local demand and consumption high – effectively everyone’s money keeps going around the economic system.

If you are familiar with thermodynamics of complex systems, you can think of it a being a very dense network of energy flows versus a less dense, more “linear” one. The denser network extracts more enthalpy from its energy inputs.

its not the cost of my computer that will add to consumer costs in this country with a lower AUD, but the costs of all the imported stuff that business use and which they will pass on to us without our wages increasing.

You have a good chain of logic there, but there is one issue:

The real costs of producing these things are falling over time as well. Even if the Aussie dollar collapses, which would cause their price to jump, the global cost trend is still down.

Good to see that the Ceres wind farm project has gotten SA govt approval. Although I also saw a preview for a story that will be on 7 news tonight about wind farm health concerns, which I expect to be laden with questionable science.

About this blog

William Bowe is a doctoral candidate with the University of Western Australia’s Discipline of Political Science and International Relations. He has been running the electoral studies blog The Poll Bludger since January 2004, independently until September 2008 and thereafter with Crikey.